Mich. Comp. Laws » Michigan Compiled Laws / Chapter 460 / Act 295 of 2008
Michigan Compiled Laws

Mich. Comp. Laws § 460.1089 (2026)

Recovery of costs; limitation; capitalization costs; funding level for low income residential programs; authorization of natural gas provider to implement revenue decoupling mechanism.

✓ current as of July 2026
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CLEAN AND RENEWABLE ENERGY AND ENERGY WASTE REDUCTION ACT


Act 295 of 2008


460.1089 Recovery of costs; limitation; capitalization costs; funding level for low income residential programs; authorization of natural gas provider to implement revenue decoupling mechanism.

Sec. 89.

    (1) The commission shall allow a provider whose rates are regulated by the commission to recover the actual costs of implementing its approved energy waste reduction plan. However, costs exceeding the overall funding levels specified in the energy waste reduction plan are not recoverable unless those costs are reasonable and prudent and meet the utility system resource cost test. Furthermore, costs for load management undertaken by an electric provider pursuant to an energy waste reduction plan are not recoverable as energy waste reduction program costs under this section, but may be recovered as described in section 95.

    (2) Under subsection (1), costs shall be recovered from all natural gas customers and from residential electric customers by volumetric charges, from all other metered electric customers by per-meter charges, and from unmetered electric customers by an appropriate charge. Fixed, per-meter charges under this subsection may vary by rate class. Charges under this subsection may be itemized on utility bills but shall not be itemized on or after January 1, 2021.

    (3) Upon petition by a provider whose rates are regulated by the commission, the commission shall authorize the provider to capitalize all energy efficiency and energy conservation equipment, materials, and installation costs with an expected economic life greater than 1 year incurred in implementing its energy waste reduction plan, including such costs paid to third parties, such as customer rebates and customer incentives. The provider shall also propose depreciation treatment with respect to its capitalized costs in its energy waste reduction plan, and the commission shall order reasonable depreciation treatment related to these capitalized costs. A provider shall not capitalize payments made to an independent energy waste reduction program administrator under section 91.

    (4) The established funding level for low income residential programs shall be provided from each customer rate class in proportion to that customer rate class's funding of the provider's total energy waste reduction programs. Charges shall be applied to distribution customers regardless of the source of their electricity or natural gas supply.

    (5) The commission shall authorize a natural gas provider that spends a minimum of 0.5% of total natural gas retail sales revenues, including natural gas commodity costs, in a year on commission-approved energy waste reduction programs to implement a symmetrical revenue decoupling true-up mechanism that adjusts for sales that are above or below the projected levels that were used to determine the revenue requirement authorized in the natural gas provider's most recent rate case. In determining the symmetrical revenue decoupling true-up mechanism utilized for each provider, the commission shall give deference to the proposed mechanism submitted by the provider. The commission may approve an alternative mechanism if the commission determines that the alternative mechanism is reasonable and prudent. The commission shall authorize the natural gas provider to decouple rates regardless of whether the natural gas provider's energy waste reduction programs are administered by the provider or an independent energy waste reduction program administrator under section 91.

History: 2008, Act 295, Imd. Eff. Oct. 6, 2008 ;-- Am. 2016, Act 342, Eff. Apr. 20, 2017

Compiler's Notes:

    Enacting section 1 of Act 295 of 2008 provides: "Enacting section 1. As provided in section 5 of 1846 RS 1, MCL 8.5, this act is severable."

Notes of Decisions
Cited in 5 cases, 2011–2016 · leading case: In re Review of Consumers Energy Co. Renewable Energy Plan, 820 N.W.2d 170 (Mich. Ct. App. 2011).
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In re Review of Consumers Energy Co. Renewable Energy Plan, 820 N.W.2d 170 (Mich. Ct. App. 2011). · cites it 31× “1071 to MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process.”
In re Detroit Edison Co., 296 Mich. App. 101 (Mich. Ct. App. 2012). · cites it 3× “MCL 460.1089(6) states: The commission shall authorize a natural gas provider that spends a minimum of 0.”
In re Michigan Consol. Gas Co.'s Compliance, 818 N.W.2d 354 (Mich. Ct. App. 2011). · cites it 30× “1071 through MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process, MCL 460.”
Enbridge Energy Ltd. P'ship v. Upper Peninsula Power Co, 884 N.W.2d 581 (Mich. Ct. App. 2015). · cites it 2× “This Court observed that while MCL 460.1089(6) authorized the PSC to approve the use of an RDM by a natural gas utility, the statute contained no similar provision for an electric utility.”
in Re Application of Indiana Michigan Power Co to Reconcile Costs (Mich. Ct. App. 2016). · cites it 4× “This Court reversed this portion of the PSC’s order, holding that pursuant to MCL 460.1089(6), the PSC had authority to approve the use of an RDM for gas utilities, but not electric utilities.”
— Mich. Comp. Laws § 460.1089(1) — 2 cases
In re Review of Consumers Energy Co. Renewable Energy Plan, 820 N.W.2d 170 (Mich. Ct. App. 2011). “1071 to MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process.”
In re Michigan Consol. Gas Co.'s Compliance, 818 N.W.2d 354 (Mich. Ct. App. 2011). “1071 through MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process, MCL 460.”
— Mich. Comp. Laws § 460.1089(2) — 2 cases
In re Review of Consumers Energy Co. Renewable Energy Plan, 820 N.W.2d 170 (Mich. Ct. App. 2011). “1071 to MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process.”
In re Michigan Consol. Gas Co.'s Compliance, 818 N.W.2d 354 (Mich. Ct. App. 2011). “1071 through MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process, MCL 460.”
— Mich. Comp. Laws § 460.1089(5) — 2 cases
In re Review of Consumers Energy Co. Renewable Energy Plan, 820 N.W.2d 170 (Mich. Ct. App. 2011). “1071 to MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process.”
In re Michigan Consol. Gas Co.'s Compliance, 818 N.W.2d 354 (Mich. Ct. App. 2011). “1071 through MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process, MCL 460.”
— Mich. Comp. Laws § 460.1089(6) — 5 cases
In re Detroit Edison Co., 296 Mich. App. 101 (Mich. Ct. App. 2012). “MCL 460.1089(6) states: The commission shall authorize a natural gas provider that spends a minimum of 0.”
In re Review of Consumers Energy Co. Renewable Energy Plan, 820 N.W.2d 170 (Mich. Ct. App. 2011). “1071 to MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process.”
In re Michigan Consol. Gas Co.'s Compliance, 818 N.W.2d 354 (Mich. Ct. App. 2011). “1071 through MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process, MCL 460.”
Enbridge Energy Ltd. P'ship v. Upper Peninsula Power Co, 884 N.W.2d 581 (Mich. Ct. App. 2015). “This Court observed that while MCL 460.1089(6) authorized the PSC to approve the use of an RDM by a natural gas utility, the statute contained no similar provision for an electric utility.”
in Re Application of Indiana Michigan Power Co to Reconcile Costs (Mich. Ct. App. 2016). “This Court reversed this portion of the PSC’s order, holding that pursuant to MCL 460.1089(6), the PSC had authority to approve the use of an RDM for gas utilities, but not electric utilities.”
— Mich. Comp. Laws § 460.1089(7) — 2 cases
In re Review of Consumers Energy Co. Renewable Energy Plan, 820 N.W.2d 170 (Mich. Ct. App. 2011). “1071 to MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process.”
In re Michigan Consol. Gas Co.'s Compliance, 818 N.W.2d 354 (Mich. Ct. App. 2011). “1071 through MCL 460.1089, or of turning to an “independent energy optimization program administrator,” a nonprofit organization selected by the PSC through a competitive bid process, MCL 460.”
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